Profit-taking weighs on Gulf; Egypt stock market drops

Reuters

Profit-taking swept across most stock markets in the Middle East on Monday, with United Arab Emirates bourses particularly hard hit by slides in construction company Arabtec and energy business Dana Gas .
Dubai’s Arabtec dropped by its 10 percent daily limit to a five-year low of 0.90 dirhams, falling below technical support at its December 2015 low of 0.93 dirhams.
The company reported a week ago that its net loss had widened in the fourth quarter and that its board was seeking shareholder approval for a 1.5 billion dirhamrights issue.
The main Dubai index retreated 1.2 percent, with 22 stocks declining and only four closing higher. Abu Dhabi’s index declined by 0.9 percent on the back of a 4.1 percent drop in Dana Gas after it made a downward revision to its unaudited preliminary results for 2016 to a net loss of $88 million from the previously reported net profit of $33 million.
It cited a ruling by the London Court of International Arbitration this month in its dispute with the Kurdistan Regional Government. The ruling reduced unrealised interest recorded on Dana’s books.
Banks, which had been buoying the market over the past week, were also weak, with National Bank of Abu Dhabi falling 1.4 percent.
Saudi Arabia’s index lost 1 percent as a little more than four fifths of traded shares declined. All but two of the 12 listed banks fell. Alawwal Bank 2.7 percent rise on Sunday was all but wiped out by Monday’s 2.6 percent decline.
Arabian Cement, however, rose 1.8 percent after its board recommended a cash dividend of 2 riyals per share for the second half of 2016, taking its full-year cash outlay to 4 riyals. For 2015 the cement maker had paid out 4.5 riyals. Egypt’s main index extended losses with a 0.8 percent fall. Foreign funds remained net sellers of stocks, but by a much smaller margin than on Sunday, as the Egyptian pound held near Sunday’s three-month high against the U.S. dollar.
Foreign investors bought stocks heavily in the months after the currency was floated on Nov. 3, when the Egyptian pound depreciated. But the pound’s rally in the past couple of weeks has made stocks more expensive for foreigners and encouraged some to book currency gains. EFG Hermes, one of the shares favoured by foreign funds, fell 0.8 percent. The company told Reuters in an emailed statement on Monday that it was committed to “distributing surplus cash to common shareholders” and that the decision was pending board sign-off. It did not give an indication of the size of the expected distribution.
Last year the bank said it planned to distribute to shareholders 1.08 billion Egyptian pounds ($68.8 million) of proceeds from
an asset sale in cash and through share
buybacks, but no final agreement was
announced.